What Does Westfield Mall Closing Mean for San Francisco?
Westfield’s decades-old San Francisco Centre mall will officially shutter following the announcement of the departure of an anchor department store last month.
The multinational retail property group is surrendering the property to its lenders after defaulting on a $558 million loan, according to the San Francisco Chronicle. “For more than 20 years, Westfield has proudly and successfully operated San Francisco Centre, investing significantly over that time in the vitality of the property,” the group told the outlet. “Given the challenging operating conditions in downtown San Francisco, which have led to declines in sales, occupancy and foot traffic, we have made the difficult decision to begin the process to transfer management of the shopping center to our lender to allow them to appoint a receiver to operate the property going forward.”
More from Sourcing Journal
Inventory Realignment Gives Department Stores, Online a Boost in 2023
Buybuy Baby Interest Suggests Strategic M&A Is Gaining Ground
Nordstrom, which will close its doors at the San Francisco Centre mall in August and shutter its nearby Nordstrom Rack location in July, also cited the city’s changing dynamics and declining shopper footfall as factors in its decision to depart, as well as shoplifting and “deviant shopper behavior.” A number of retailers, including Saks Off Fifth, Anthropologie, and even Bay Area headquartered Gap, Inc. brands like Banana Republic, Athleta and Old Navy have all closed stores in the area.
A tech industry exodus has also left many downtown office buildings standing empty, creating an inhospitable atmosphere for the Bay Area city’s retail sector. During the pandemic, many Silicon Valley startups and stalwarts with offices downtown allowed employees to work from home, and eventually, gave up their offices altogether. Companies like Meta, Salesforce, Slack, Lyft, Slack, Block, Airbnb, PayPal and Autodesk have collectively vacated millions of square feet of office space over the past year alone—and workers have followed suit.
San Francisco’s population has seen three consecutive years of decline. According to U.S. Census Bureau data, 7.1 percent of residents vacated the city between April 2020 and July 2022. Meanwhile, a wave of tech industry layoffs that began last year continues to pummel the sector. Meta, Google, Amazon, Zoom and Microsoft all announced workforce cuts in the tens of thousands over the past six months—sure to signal continued population shrinkage within the region.
For Westfield, the San Francisco Centre closure may by symptomatic of these trends, along with the rising retail crime rates that began to accelerate during the pandemic. But the retail property giant, which operates 78 shopping centers in 12 countries, has also said that it is working to guard against global economic headwinds by “maintaining deleveraging progress with U.S. and European asset sales.” Last month, the company announced that it had sold the Westfield Brandon mall, located in Brandon, Fla. For $220 million, along with a $95 million office building in Versailles, France.
“Unibail-Rodamco-Westfield has now generated $1.6 billion in total proceeds from the planned radical reduction of its financial exposure to the U.S.,” along with shrinking its European asset portfolio by about $3.6 billion, the company said in late May.
